An audit firm is in the process of taking on a new audit client. As part of accepting the new audit engagement, a preliminary meeting is to take place between a team from the audit firm and a team from the new client. You and your team members are to enact this meeting in this role play task.

The new client is a recently established Company in Australia, and is part of a larger group based in Spain. The Company operates in the manufacturing sector making equipment and components for the auto industry. At the moment, the CEO, CFO and some other executives are expats brought in from Spain. The financial year started on 1 July 2019 and will end on 30 June 2020.

In the preliminary meeting, the CEO of the new client will present information about the nature of their business, the industry they operate in, the market conditions that they face and the extent of their operations in Australia (including locations and market share). The CFO shall present information about the accounting function in the entity (size of the accounting team, key positions in the accounting area etc), the accounting system that they use, and a brief overview of the internal controls in the financial reporting system. The financial accountant will present interim financial information and other related accounting information (accounting standards that they apply and major accounting policies - such as whether they use cost or fair value to account for PPE). The information that will be presented would have to be hypothetical but should suit the Company as described above. The team from the client will also have to field questions from the team from the audit firm. The client team is also expected to seek clarifications from the team from the audit firm and ask questions about the audit that will be performed (such as, but not limited to, the deliverables they can expect, the extent of the audit work, timelines for the audit, information that the audit team will need to perform the audit etc).

The audit team will be led by the lead engagement partner who will present information on the audit firm, its expertise, its ability to serve the new client (including the other services that they can provide the new client). It will be important to explain to the client the value of the audit that your firm will present. The lead engagement partner will be joined by two managers on the audit team. The first manager shall present information about the audit team that will conduct the audit (such as, size of the audit team, members on the audit team), the time frame for the audit, the auditing standards that will be applied and the various stages of the audit. The second manager shall present information on the scope of work that will be performed (it would be important to explain what services are going to be out of the scope of the financial report audit), the types of audit tests they will perform, the information that the audit team will need from the client to perform the audit tests and the list of external entities that the audit team will need to contact to gather evidence (it would be prudent to seek the clients' approval to contact some of the external parties). It is expected that the audit team will make enquiries of the team from the client to gather as much information as they need. The audit team will also have to field questions from the team from the new client.